Dan Kommeth and the Challenge of Inventory Acquisition
Transcript
Kelly : So what’s it been, like challenge wise to get used inventory for you? n
nDan : Well, yeah, that’s a good question. So we, you know, we used to buy a lot of cars at the auction, well, when the when the rental car companies got shut out, and they started, you know, buying up everything, and really, the prices were just ridiculous, so we had to kind of double down on on our different acquisition strategies in a number of different ways. n
nThe first one, the biggest one is, is obviously your trade- ins that are being presented to you. So cars for appraisal, so we looked at, we looked at that, where we had a way to get, get our used car managers, some backups, or our vehicle buyers who are buying cars at the auction, where they can help appraise cars virtually, but they don’t have to be in the store. n
nSo what we do is using V-Auto, one of our our partners there, we can actually do a headquarters appraisal, so they’ll tell us used car manager, I’ll send an appraisal over what they think it’s, you know, what the car is worth, we want to make sure that, you know, we’re not missing a trade because, you know, if if there’s a Ford F-250, that’s being presented for trade at a, one of our Buick GMC truck stores. Well, they might not know, you know that you can build a pickup truck a million different ways. They might not know where it’s like, oh, that hey, that Ford truck, you know that that thing is super hot, it looks like it’s worth, you know, 70 grand, that’s actually worth 77! The buyers know that, you know, just from dealing with all the stores, so you’re not missing on trades (as the first one). n
nSo we looked at our book to kind of pump that up, right and get more cars that way. The other is, you know, different strategies, but one is a KBB buying center, you know, getting those leads from the consumers. Now, obviously, Kelley Blue Book has a tremendous presence. And you have to be super aggressive going after those to get them but if they’re nice cars, it’s still cheaper than what you’d pay at the auction block. n
nSo that was another strategy. And then, and then really mining our own data, right. So it, there’s a number of vendors out there that have, you know, just to, to get into your own customer base, and really dig through, dig through who would be a prospect and that’s it’s kind of like panning for gold, you know, you’re gonna sift through a lot there. And you really have to find the right person or persons in a store who are willing to get a lot of those. Because if you ask them this instead of saying, Hey, can I trade you in the car, (do) we have another car to trade into? Right? So it’s a question of, can I buy your car? And that’s, you know, and occasionally you get somebody who’s like, Well, yeah, that is an extra car hanging around. Yeah, let’s, let’s figure that out. But a lot of No, no, no, no, no, not interested. Not interested. So it’s really not one. One overarching thing, it’s just how can we get little, little pockets here and there to try to get, try to get to the inventory. Then really, in terms of being more efficient with it, and trying to just be mindful of the turn, you know, once again, getting back to VAuto, where it’s like, we realized, okay, you don’t need to have 100 cars in stock in order to you know, sell 80 of them, right, you can have 60 in stock and sell 80 of them by increasing, increasing return. n
nSo adapting the strategies and working with the used car managers just to see where it’s like, okay, just, you know, we acquire a car, let’s get it in somebody’s driveway as quickly as possible. Let’s determine what the market is for that car. Is it a hot market? Or is it a slow market? If it’s a, if it’s a slow market on that car, like right now, if you’ve got to, with gas prices being what they are, you know, we acquire something that’s a big gas guzzler or whatever and we look at the market day supply and that current is higher. Well, we’re gonna price that sucker to move, right. It’s a you know, so the, because I want to, I want to get rid of that and I want to hopefully acquire something that is more desirable in the marketplace, right? And so that just focusing on that where you realize we can make the same the same money, if not more, selling fewer cars just through that turn.n
nDan : Well, yeah, that’s a good question. So we, you know, we used to buy a lot of cars at the auction, well, when the when the rental car companies got shut out, and they started, you know, buying up everything, and really, the prices were just ridiculous, so we had to kind of double down on on our different acquisition strategies in a number of different ways. n
nThe first one, the biggest one is, is obviously your trade- ins that are being presented to you. So cars for appraisal, so we looked at, we looked at that, where we had a way to get, get our used car managers, some backups, or our vehicle buyers who are buying cars at the auction, where they can help appraise cars virtually, but they don’t have to be in the store. n
nSo what we do is using V-Auto, one of our our partners there, we can actually do a headquarters appraisal, so they’ll tell us used car manager, I’ll send an appraisal over what they think it’s, you know, what the car is worth, we want to make sure that, you know, we’re not missing a trade because, you know, if if there’s a Ford F-250, that’s being presented for trade at a, one of our Buick GMC truck stores. Well, they might not know, you know that you can build a pickup truck a million different ways. They might not know where it’s like, oh, that hey, that Ford truck, you know that that thing is super hot, it looks like it’s worth, you know, 70 grand, that’s actually worth 77! The buyers know that, you know, just from dealing with all the stores, so you’re not missing on trades (as the first one). n
nSo we looked at our book to kind of pump that up, right and get more cars that way. The other is, you know, different strategies, but one is a KBB buying center, you know, getting those leads from the consumers. Now, obviously, Kelley Blue Book has a tremendous presence. And you have to be super aggressive going after those to get them but if they’re nice cars, it’s still cheaper than what you’d pay at the auction block. n
nSo that was another strategy. And then, and then really mining our own data, right. So it, there’s a number of vendors out there that have, you know, just to, to get into your own customer base, and really dig through, dig through who would be a prospect and that’s it’s kind of like panning for gold, you know, you’re gonna sift through a lot there. And you really have to find the right person or persons in a store who are willing to get a lot of those. Because if you ask them this instead of saying, Hey, can I trade you in the car, (do) we have another car to trade into? Right? So it’s a question of, can I buy your car? And that’s, you know, and occasionally you get somebody who’s like, Well, yeah, that is an extra car hanging around. Yeah, let’s, let’s figure that out. But a lot of No, no, no, no, no, not interested. Not interested. So it’s really not one. One overarching thing, it’s just how can we get little, little pockets here and there to try to get, try to get to the inventory. Then really, in terms of being more efficient with it, and trying to just be mindful of the turn, you know, once again, getting back to VAuto, where it’s like, we realized, okay, you don’t need to have 100 cars in stock in order to you know, sell 80 of them, right, you can have 60 in stock and sell 80 of them by increasing, increasing return. n
nSo adapting the strategies and working with the used car managers just to see where it’s like, okay, just, you know, we acquire a car, let’s get it in somebody’s driveway as quickly as possible. Let’s determine what the market is for that car. Is it a hot market? Or is it a slow market? If it’s a, if it’s a slow market on that car, like right now, if you’ve got to, with gas prices being what they are, you know, we acquire something that’s a big gas guzzler or whatever and we look at the market day supply and that current is higher. Well, we’re gonna price that sucker to move, right. It’s a you know, so the, because I want to, I want to get rid of that and I want to hopefully acquire something that is more desirable in the marketplace, right? And so that just focusing on that where you realize we can make the same the same money, if not more, selling fewer cars just through that turn.n